15 minute read

Whether you’re new to the workforce or making a pivot, mortgage broking can be an enticing career choice. With attractive income growth potential and flexible lifestyle factors, a career in finance broking offers flexibility of hours in a varied and diverse role. To succeed, you’ll need the foresight and perseverance to set long term goals, and an actionable plan to help you reach them. The first step to all of this is having an airtight mortgage broker business plan.

Here we show you how you can create a mortgage broking business plan to set your business up for future success. As a mortgage broker, you’ll be providing an important service to Australians all over the country. By being the best mortgage broker business you can be, you are helping Australians achieve their dream of owning a home.

Plan for the long-term when starting a mortgage broker business

Before starting a mortgage broker business, it’s important to reflect on your key values, soft skills, technical skills and natural aptitudes, in addition to your personality type and interests. As a mortgage broker, you’ll be helping consumers navigate life-changing decisions, providing informed guidance in what can often be stressful times. It’s a challenging role, requiring a unique blend of soft and hard skills.

It might seem basic, but the first step in any business plan for mortgage brokers is asking yourself the right questions. A SWOT analysis will help you weigh up the pros and cons of a mortgage broking career, and provide clarity on your target market, business size, and long term growth plan. This can go a long way to prematurely jumping into any bold decision.

The first and foremost quality that defines a good broker is an authentic desire to help customers find the ideal solutions. Successful mortgage brokers are customer-oriented, have a knack with numbers, and can set long-term goals. Planning is everything, because the nature of mortgage broking means that you’ll be solving complex problems whilst also managing long-term relationships. To succeed, you’ll need the foresight and perseverance to set long-term trajectories towards results-focused goals, and that means a mortgage broker business plan that considers the next 5 years and beyond is vital to business success.

It is worth noting, mortgage brokers are not alone in this journey and are also able to look for help outside their organisation to support their business practices. For this reason, it is worthwhile considering how you can create a mortgage broker marketing plan to complement your business plan before beginning your life as a mortgage broker. This can help you plan for the future, in particular, it will inform how you can generate new opportunities and prospects on an ongoing basis. By forming the right support team around your business, you can add value to your strengths, while focusing on the things you do best.

Calculate the cost of setting up a mortgage broking business

Many aspiring mortgage brokers are taken by surprise when faced with setup costs, and it’s crucial not to overlook any expenses when writing a mortgage broker business plan. Independent mortgage brokers undoubtedly pay the largest setup and ongoing costs, but the right decisions on business structure and aggregator can save you money over the long run. 

If you join an existing brokerage you’ll have some support to cover the costs of getting started such as branding and marketing, but more significantly, existing firms usually cover many overheads should you join the right one. It is for this reason that mortgage brokers can save thousands with the right partners and aggregators.

If however, you are looking to become your own boss, then starting your own mortgage broking business has its benefits too. Investing in your own brand can lay the foundation for financial independence over the long-run as your brand can eventually work for you. 

Start a mortgage broker business with our setup checklist

Whether you’re new-to-industry or starting a mortgage broking business, it’s worth familiarising yourself with the various certification, licensing, membership and insurance fees required. Calculating setup costs is an important step in any mortgage broker business plan. 

This checklist covers some of the start-up essentials you won’t want to overlook.

  • Aggregator joining fee: $0 to $50,000 for a franchise
  • Monthly aggregator fee: Approximately $500 per month taken from your commission
  • Credit history check: $79.95
  • Police history check: $42
  • Credit licence (for independent brokers): Up to $10,000
  • External Dispute Resolution (EDR) Membership: $350 upfront fee + $140 annual fee.
  • Professional Indemnity Insurance (PI Insurance): Approximately $1,000
  • Certificate IV or Diploma in Mortgage Broking Management : $440 to $1090
  • Industry association membership: $420+
  • Mentoring: between $2,500 to $10,000 per annum

On top of this, you should also consider the costs associated with marketing your brokerage, including logo design, business cards, website design and development and lead generation. While these costs can vary significantly, it is worth noting that marketing has a direct correlation to attracting new customers making it a worthwhile investment to make.

Decide on your mortgage broker business structure

A key decision when making your mortgage broker business plan is whether you’ll be working for a brokerage as a contractor, on a PAYG basis (employee), or striking out as a sole trader. With the right brokerage agreement, PAYG mortgage brokers have the potential to save thousands on operating costs, training, support staff and systems, in addition to guaranteed leads each month. For this reason, researching potential firms is high on the list for a successful mortgage broker business plan. As a contractor or PAYG employee, a good brokerage will help you maximise your profits.

As a self-employed broker on the other hand, you get to decide your own fortune through your own efforts. This means flexible work hours, control over your earnings and commission, and complete autonomy on marketing and business decisions. There are, however, a number of ongoing expenses to factor into your mortgage broker business plan if you are planning to operate your mortgage broker business under your own banner.

Failing to plan ahead for running costs is what leads most new Australian businesses to fail in the first few years. As a self-employed broker, having a thorough mortgage broker business plan could be what makes or breaks your business. For an independent mortgage broker, some basic running costs to consider include:

  • Whether or not your mortgage broker business will be operating from an office space
  • Deciding on your phone and IT system
  • Mortgage broker marketing for branding and lead generation
  • Subscriptions for market data and industry insights
  • Travel costs and client entertaining 
  • Your expected salary
  • Cash on standby for liquidity

Becoming a certified mortgage broker

To become a certified mortgage broker, you’ll first need to complete a Certificate IV in Finance and Mortgage Broking (FNS40815) as a minimum requirement. Next, depending on the aggregator and industry body you join, you may be required to complete a Diploma in Finance and Mortgage Broking Management (FNS50315). Each course takes about 6 months to complete, and you can complete both in a year via distance education. Rather than engaging solely in an online course, which can feel sterile and un-motivating, many experienced mortgage brokers recommend workshops designed to streamline the study process by guiding you through the learning material. For the Cert IV, workshops are typically 3 days depending on the training provider, and Diploma workshops are an additional 2 days. 

For credit officers and other finance industry professionals looking to gain formal qualifications, Recognition of Prior Learning (RPL) discounts may be available, so it’s worth researching this when you’re choosing a Registered Training Provider (RTO) to study with. Different RTOs have varying fees, and it’s worth researching the reputation of an RTO before committing. A Certificate IV in Finance and Mortgage Broking (FNS40815) can be up to $585, and a Diploma in Finance and Mortgage Broking Management (FNS50315) can be as high as $1090. Fortunately for new-to-industry mortgage brokers, brokerages often partner with RTOs to provide discounts for their employees.

Choose a mortgage aggregator that’s right for you

An aggregator, also called a ‘franchisor’, effectively serves as a middleman between the banks and the mortgage broker. In addition to providing access to their panel of lenders, aggregators also provide software and commission processing functions. Some aggregators also offer branding, leads and training which can really save you time and money.

On average, aggregators have between fifteen to forty lenders on their panel, and it’s helpful to note that the best mortgage brokers have access to at least ten lenders.

Some of the biggest aggregators in Australia include:

  • AFG
  • Choice Aggregation Services
  • Connective Group
  • eChoice Home Loans
  • Finconnect (Australia)
  • Finsure 
  • Loan Market
  • PLAN Australia
  • Vow Financial Group

How do aggregator fee structures work?

Aggregator fee structures fall into two basic categories: commission split, and the fee-based model. 

Commission split

This model involves the mortgage broker giving the aggregator a percentage of the commission payment, typically 90% to the broker and the remaining 10% to the aggregator, and a percentage of the trail commission. Because the aggregators only take their cut of commission once the payment is received, this model is preferable for mortgage brokers who are just starting out. 

Fee-based model

This model involves a monthly capped fee paid to the aggregator in exchange for access to lenders, being a flat-rate trail fee based on the loan amount. This means the more loans you write, the more you earn – because you won’t have to pay out commissions on each individual mortgage. However, this model is only beneficial if you’re writing enough loans to justify the monthly fee. 

Choosing an aggregator shouldn’t be seen as just another regulatory requirement to meet when writing your mortgage broker business plan. It’s essential for your success as a mortgage broker that the aggregator fee structure and their panel of lenders are the right fit for your business.

Unsure which aggregator is right for you? MBW is here to help you weigh the options and determine which model is the most beneficial for your mortgage broker business plan.